Answer:
Ranking from Most to least
(i) 1%,
1. 135 in 10 years = 122.21
2. 120 in 5 years = 114.18
3. 105 in one year = 103.96
(ii) 3%
1. 120 in 5 years = 103.51
2. 105 in one year = 101.94
3. 135 in 10 years = 100.45
(iii) 5%
1. 105 in one year = 100.00
2. 120 in 5 years = 94.02
3. 135 in 10 years = 82.88
Explanation:
(i) 1%,
105 in one year
PV = 105 x ((1+0.01)^-1) = 103.96
120 in 5 years
PV = 120 x ((1+0.01)^-5) = 114.18
135 in 10 years
PV = 135 x ((1+0.01)^-10) = 122.21
(ii) 3%
105 in one year
PV = 105 x ((1+0.03)^-1) = 101.94
120 in 5 years
PV = 120 x ((1+0.03)^-5) = 103.51
135 in 10 years
PV = 135 x ((1+0.03)^-10) = 100.45
(iii) 5%
105 in one year
PV = 105 x ((1+0.05)^-1) = 100.00
120 in 5 years
PV = 120 x ((1+0.05)^-5) = 94.02
135 in 10 years
PV = 135 x ((1+0.05)^-10) = 82.88
